M. Continuo
Greek parties in last-gasp bid to avert elections
ATHENS (Reuters) - Greek political parties were engaged in a last-gasp attempt to form a government and avoid new elections on Thursday after voters rejected an international bailout and plunged the debt-ridden country into crisis.
Socialist PASOK party leader Evangelos Venizelos is the third and last political leader to try to form a government after Sunday's election, which left pro- and anti-bailout forces balanced almost equally.
The last hopes were pinned on small Democratic Left leader Fotis Kouvelis, a moderate leftist who emerged from a meeting with Venizelos proposing an all-party government that would keep Greece in the euro while detaching it from the bailout deal.
Sources said his party was divided on joining a coalition without other leftists, who have flatly rejected such proposals.
"There is a very slim chance for a coalition if Kouvelis agrees," one socialist party official said on condition of anonymity. "But his party is split right down the middle."
Officials said any deal was unlikely before the president calls all political leaders for one final effort, the last stage before new elections are called in three or four weeks.
Venizelos acknowledged he only had a slim chance in remarks to his parliamentary group, reduced to about a quarter of its former strength by elections in which voters punished his party and conservative New Democracy for imposing harsh austerity in exchange for a 130-billion-euro ($168-billion) EU/IMF bailout.
He was given three days to try and form a government after radical Leftist Coalition SYRIZA leader Alexis Tsipras formally gave up his attempt, telling President Karolos Papoulias it was not possible.
"There is no way SYRIZA can take part in such a coalition," a party official said.
New Democracy leader Antonis Samaras, who finished first in the election, surrendered his effort within hours on Monday. He will meet Venizelos on Friday.
As political efforts hit deadlock, new data underlined the depth of Greece's five-year recession, one of the worst in post-war Europe. The jobless rate hit a new record in February, showing one in five Greeks and one in two young people were out of work.
Young people are thought to have been a major component of the Left Coalition's success in the election, which took its vote from 5 percent in 2009 to nearly 17 percent, dislodging once mighty PASOK as the second party.
EUROPEAN WARNINGS
The deadlock prompted a stream of warnings by European leaders that Greece would be thrown out of the euro if it did not stick to the terms of the bailout, which is the only thing keeping it from bankruptcy.
"We do not have an infinite amount of time. Time is flying because there are financing needs, but the first steps have to be taken now from the Greek side," European Central Bank governing council member Ewald Nowotny said in Vienna.
German Finance Minister Wolfgang Schaeuble said Europe and the International Monetary Fund were still determined to help Greece, but the country could not be helped if it did not help itself.
EU officials have telephoned Greek party leaders in recent days to deliver a stern message and impatient European governments withheld part of the latest tranche of rescue funds to be paid to Greece on Thursday, apparently to tighten the screws on Athens [ID:nL5E8G9D4G]
One Greek official, speaking anonymously, was critical of a decision by the European Financial Stability Facility rescue fund to withhold a portion of the next payment of aid to Athens.
"This sends the wrong signal," said the official. "It looks like blackmail by Europe. If they have elections again, people will vote against it."
So widespread is the pessimism that British bookmaker Ladbrokes has suspended betting on Greece leaving the euro zone by the end of the year.
There is deep uncertainty over what Greeks would do in a second election. Many say they would stick to their guns despite the European threats, but there is a chance some would move back to mainstream parties because of fears of a euro exit.
"I have no regrets. I feel vindicated because the two pro-bailout parties have been unfair with us for so many years," said 70-year-old Petros Chiotopoulos.
The great majority of Greeks want to stay in the euro, but most also voted against the austerity measures which are the price for that, creating a conundrum which may be impossible to resolve even after a second poll.
"We want to stay in the euro. We want to be on an equal footing with other people and not just slaves of some countries," said public sector worker Dimitris Nasis, 62.
A Reuters poll of economists showed they were split on whether Greece's troubles would lead to a euro exit.
Even if a government can be formed, it is likely to last only a few months because of the diametrically opposed views of the major political groups.
Tsipras had demanded that New Democracy and PASOK, which have ruled Greece for decades, tear up the pledges they made in return for the bailout. They rejected this out of hand.
On Thursday, he sent a letter to top European policymakers such as EU Commission President Jose Manuel Barroso, saying the Greek people had voted to reject the bailout deal.
"It is our deep belief that the problem of the crisis is European, therefore the solution must be found at a European level," he wrote.
Angela Merkel, leader of euro zone paymaster Germany, said in a newspaper interview that she wanted Greece to stay in the common currency but it must stick to the terms of the bailout. A senior lawmaker in her coalition said a disorderly Greek default would be less worrying now than it was a few months ago because the European Union is better prepared.
Greece's turmoil, and the prospect that it could revive the euro zone debt crisis, have rattled global markets, pushing down shares and the euro.
(Additional reporting by Karolina Tagaris, Renee Maltezou, Tatiana Fragou and George Georgiopoulos; Writing by Dina Kyriakidou; Editing by Giles Elgood)